Tuesday, March 21, 2017

G-20 Renews Its Commitment to Basel III

Will also keep an eye out for unintended adverse consequences.

Author: David Schwartz


“We reiterate our commitment to support the timely, full and consistent implementation and finalisation of the agreed G20 financial sector reform agenda."


In a statement issued following a two-day meeting in Baden-Baden, finance chiefs of the Group of 20 nations renewed their pledge to finalize the Basel III overhaul of global banking standards. The G-20 urged the Basel Committee on Banking Supervision (BIS) to finalize the Basel III reforms “without further significantly increasing overall capital requirements” from those previously proposed. 

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Sunday, March 19, 2017

Basel Issues Step-In Risk Consultation Sequel

Author: David Schwartz

On March 15, 2017 the Basel Committee on Banking Supervision published a second consultation paper on guidelines for the identification and management of step-in risk. The first consultation on the topic in December of 2015 set out a framework for identifying and managing step-in risk – the risk that a bank might support unconsolidated entities, beyond any contractual obligation, to protect itself from any reputational damage arising from its connection to such entities. This second consultation takes into consideration comments received on the first proposal, includes proposed reporting and other templates to regulators, and offers a timetable for adoption of the framework. 

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Thursday, March 16, 2017

OFR Publishes Trio of Central Clearing Studies

Author: David Schwartz

Over the past few weeks, the U.S. Office of Financial Research (OFR) has published a trio of papers looking at various aspects of central counterparties (CCPs). These papers range from the best way to stress test CCPs, to the adequacy of CCP margin requirements and the relative risks and utility of central clearing to repo markets.

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Thursday, March 9, 2017

GOP Congressmen Warn the Fed to Freeze their Rules

Author: David Schwartz

On February 23, 2017 House Financial Services Committee Chairman Rep. Jeb Hensarling (R-TX) and 33 GOP members of the Committee sent a letter to Federal Reserve Chair Janet Yellen requesting that the Fed “neither propose nor adopt any new rules until the U.S. Senate confirms a [Federal Reserve] Vice Chairman for Supervision.”  The letter is in response to Congressional testimony that Yellen gave on February 15, 2017 where she indicated that the Fed might be finalizing a proposal that “pertains to the stress tests and what it called the Stress Capital Buffer.”  

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Monday, March 6, 2017

Four Disruptive Elements Drive Regulatory Activity

“Undercurrents of Disruption to Our Markets and Societies: How We Can Respond”

Author: David Schwartz

In her keynote address at the 2017 Brodsky Family Northwestern JD-MBA Lecture Series, CFTC Commissioner Sharon Y. Bowen described her thinking on the key trends driving regulatory activity. Commissioner Bowen identified “four disruptive elements” she believes are substantially responsible for changes that have been seen recently in financial markets. In turn, these disruptive elements are prompting questions about what they mean for markets and society, and what actions we should ask from regulators.

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